Ardern announces KiwiRent

Once again a newspaper treats us to an insight into the wonderful world of Labour’s understanding of how things work. Quote.

Prime Minister Jacinda Ardern has rejected the Opposition’s claims that average rents have increased by more than twice as much under her Government than they did under National.

She told Breakfast that the data provided to her showed rent rises have been “pretty consistent” across the last five years.

“Rents, on average, have increased between 4 and 5 per cent each year.”

This was despite National’s claims rents had gone up 2.5 times faster under the Labour-led Government than they did under National. End quote.

That is the great thing about politicians, statistics and maths; you can make anything sound the way you want it.

Let’s assume (totally fabricated figures) that rents rose by 2% each year for 4 years and 15% after the Coalition of losers took power. Under National that would be an increase of 8.2% over four years. Add 15% under the (non) Labour-led Coalition and the five-year rise is 24.5%, which averaged over five years is 4.9%. That is exactly what Ardern said. “on average, … between 4 and 5 per cent each year.”

As she once said, “I never tell lies.” Quote.

“Median rents have risen by $30 a week in the past 12 months, which is an increase of $1560 a year,” National Leader Simon Bridges said earlier this week.

He blamed “a raft of poorly thought through policies” including the extension of the bright-line test, ring-fencing of losses, more burdensome regulations, the ban on foreign investment as well as the “threat of a capital gains tax”.

But Ardern said this was not the case.

The bright-line test, for example, had been brought in under National’s watch but extended from three to five years by this Government.

She said it was true to say there had been rent increases, but it was not true for the Opposition to claim there had been an exponential rise in rents because of the Government.

“The reason for the increases, as anyone would assume, if you have more demand than you do supply, then it’s a problem,” she told Breakfast. End quote.

So, ask the question, “Why is the supply dwindling?” Here is an answer from commenter KiwiSub to an earlier post. Quote.

We are out, our first rental is now on the market with the rest to follow next year. We are good landlords who live in a house that is inferior to any of our rentals. All our rentals comply with the new insulation and only one does not have a heat pump and the oldest is about 12 years old. We have excellent agents and really good tenants but we have better things to do with our money than have the government tell us what we cannot and can’t do with our investments.

Sorry kids, we are about to spend your inheritance, let the good times begin. Firstly is a better house for us to live in and a business class trip to Europe next year. We also have friends who are also selling right now and some that have been happy working all their lives and happy doing that but are now in early retirement living off the proceeds.

We thought a year ago that we would never sell our rentals, how a year and new government can change our ideas. End quote.

There are many landlords out there who are genuinely fearful of what the muppets in Wellington will dream up next. I, for one, am really glad we sold our rentals.

Ardern continues Quote.

“I absolutely acknowledge that, which is why we are intervening in the market,” she said referring to the Government’s KiwiBuild policy which she said was solving the supply side issues. End quote.

Well, that’s a new twist. Kiwibuild properties are going to be available for rich prick property investor landlords to buy so that they can add to the rental pool and solve the supply side issues. Fab! Quote.

Housing Minister Phil Twyford was singing a similar tune yesterday and pointed the finger back at the previous National Government.

“Reserve Bank research shows that rents are driven primarily by supply and demand, not landlord costs. Our Government inherited a dire shortage of housing around the country after the former government ignored the housing crisis.” End quote.

Absolutely! (to coin a phrase) People in business do not take their input costs into account when determining price, they simply hold up a wet finger to check the conditions. Quote.

Ardern defended the Government’s approach to housing.

In regards to the Government’s Healthy Homes legislation, Ardern said her view was most landlords do want to provide a warm dry home for their tenants and that is not “an unreasonable expectation”.

“Yes, we have made some changes to say we don’t want people to get pinged with letting fees, but those are actually changes we need to make because in our marketplace at the moment, more people are renting.” End quote.

Hang on a bit … ” more people are renting” so demand is not exceeding supply? Oh, I’m confused.

It has been said here before and no doubt it will be said again that banning letting fees is never going to save tenants money. They will pay one way or another. Ditto for fixed heating, ditto for whatever else the government imposes to make life better for tenants.

Most responsible landlords already provide a warm dry home for their tenants. Okay, there are some ratbags out there (yes, Sue and Stephen Bhana in Rotorua, looking at you) but they are the exception, not the norm.

The problem is that we have a government run by people who do not understand business, economics (or even GDP in some cases) so they say they are going to fix supply as that will apparently lower rents, which in return will lower returns, which may mean landlords decide to quit market, which will decrease supply which will increase rents.

The market works. Government intervention rarely solves anything.

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